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Modeling Sequential Information Acquisition Behavior in Rational Decision Making
Author(s) -
Tavana Madjid,
Di Caprio Debora,
Santos Arteaga Francisco J.
Publication year - 2016
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/deci.12193
Subject(s) - computer science , decision maker , process (computing) , set (abstract data type) , quality (philosophy) , construct (python library) , decision support system , information system , decision process , knowledge acquisition , data mining , operations research , artificial intelligence , management science , mathematics , philosophy , epistemology , electrical engineering , economics , programming language , engineering , operating system
ABSTRACT Most real‐life decisions are made with less than perfect information and there is often some opportunity to acquire additional information to increase the quality of the decision. In this article, we define and study the sequential information acquisition process of a rational decision maker (DM) when allowed to acquire any finite amount of information from a set of products defined by vectors of characteristics. The information acquisition process of the DM depends both on the values of the characteristics observed previously and the number and potential realizations of the remaining characteristics. Each time an observation is acquired, the DM modifies the probability of improving upon the products already observed with the number of observations available. We construct two real‐valued functions whose crossing points determine the decision of how to allocate each available piece of information. We provide several numerical simulations to illustrate the information acquisition incentives defining the behavior of the DM. Applications to knowledge management and decision support systems follow immediately from our results, particularly when considering the introduction and acceptance of new technological products and when formalizing online search environments.